Texas Legislature Introduces Substitute Sales and Use Tax Bill

January 21, 2019

On January 4, 2019, Rep. Matt Krause (R) introduced a bill that would allow local taxing jurisdictions to substitute a local sales and use tax for the property tax.

Under the proposal, H.B. No. 648, “qualifying cities and counties” in Texas could elect to eliminate their local property tax and instead, impose a “supplemental sales and use tax.” The supplemental tax would be imposed in addition to any other existing sales and use tax, but only as a substitute to the property tax. The supplemental sales and use tax rate would be set to “produce an amount equal to the local government’s lost property tax revenue.”

H.B. No. 648 shifts the tax burden from larger property owners to local consumers. It remains unclear what tax rate would be required to produce the qualifying jurisdiction’s lost property tax revenue.
For questions about H.B. No. 648 and its potential impact, please contact:

Doug Sigel
Practice Group Leader, Sales & Use and Income Tax

Rich Moore
Associate, Sale & Use and Income Tax